Worried Wenner goes to Plan B as 'US' struggles

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Jann Wenner's big bet on US Weekly is proving to be more of a long shot than he expected.

The week of June 26, the Wenner Media chairman announced he will slash the guaranteed circulation (or the rate base) to advertisers of the underperforming US Weekly by 20%, to 800,000, as of July 3 issue. And that's just the start of it.

RE-EVALUATE CIRC GOALS

Wenner executives plan to substantially re-evaluate its single-copy circulation goals so that average sales by yearend settle at 300,000. Current single-copy levels are about 380,000, Mr. Wenner said. At its mid-March launch, the title set a single-copy target of 700,000.

"We are setting in motion a conservative plan," Mr. Wenner said. The title, when it converted in mid-March to a weekly frequency, kept the 1 million rate base it maintained when it was a monthly.

The advertising community expressed some reservations about last week's move.

"It's a terrible error to go out with a big number and not meet it," said Gene DeWitt, CEO of Optimedia International, New York, who counts himself as a fan of the magazine. "That can really hurt you with advertisers."

MORE AWARE OF PITFALLS

Mr. Wenner said US Weekly advertisers had been contacted and "not a single one indicated they had problems" or cut pages. The June 26 issue carried 35 ad pages, compared to the launch issue that had 63.

While Mr. Wenner insisted he's dedicated to US Weekly, he sounded more aware of the pitfalls of diving into a fierce weekly market dominated by Time Inc.'s People, which sells an average 1.4 million copies on newsstands. "I think it will be a little more expensive and take a little longer" to succeed, he said.

One key drawback he's discovered about filling racks every week is that the money "pours out." Mr. Wenner did not specify how much the company expected to spend beyond the $50 million it said it would at the relaunch.

FEWER ISSUES AT NEWSSTANDS

The company will modify the title's distribution and draw. The number of newsstand racks, now about 140,000, "will come down" an unspecified amount, Mr. Wenner said. The draw--the number of issues sent to newsstands--will be cut from about 1.85 million to about 1.55 million. Sell-through figures--the number of copies sold--reported by wholesalers contacted by Advertising Age show US Weekly's to be as low as 25%. But Mr. Wenner allowed it had not even reached that, saying, "We are marching quickly" toward 25%.

The magazine is looking "for a natural circulation base" instead of "propping one up for a year at extreme cost and to the detriment of all involved. It reflects the learning curve" of a new launch, Mr. Wenner said. He expressed confidence that the changes would not alter ad buyers' generally positive opinions of the title, because "people are sophisticated and understand" what's behind the changes.

Cutbacks in draw are not making retail chains or the wholesalers who supply those chains happy. One staffer at a regional wholesaler spoke of pressure a major retail chain is placing on the staffer's company, since reduced draw means fewer copies of US Weekly in racks. The magazine "paid for a pocket in a chain we're having a hard time filling" since the draw has been cut, said the staffer.

"The sales are just not there," this staffer continued. "I just wish I could see the sales go up. It's a good magazine." Sell-through for the title through this wholesaler is above the 25% goal Mr. Wenner mentioned.

DETERMINED TO CONTINUE

Mr. Wenner, who admitted sell-through was as low as 15% in some areas, said the title has performed best on the coasts and in larger urban markets. Average sell-through hovers around 40%, though cover-driven weeklies at times are less.

At the time of the relaunch, Wenner executives insisted the success of the title depended on single-copy sales first, and advertiser reaction second. Advertisers, who for the most part have viewed the new format positively, have become wary about the single-copy plans.

"They better work harder on their promotion and distribution," Mr. DeWitt said.

Despite this latest wrinkle, Mr. Wenner is determined to continue. "I am going to make this a success," Mr. Wenner vowed, but could not resist waxing philosophic. "The two most important things about a launch," he said, "is the edit product--do you got it or not?--and secondly, how long can you take the pain?"

Copyright July 2000, Crain Communications Inc.

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